LUXURY APARTMENT THAT PROVED ANYTHING BUT

When Jennifer Fletcher bought her luxury apartment in Melbourne, she never thought it would lead to a battle with one of the countries biggest management companies.

Upon buying into the Tiara development at Melbourne’s Southbank two years ago, she had to join Tiara’s owners corporation and pay fees of $4,300 a year.

“I thought it would be simple. Everything would be looked after for me, but unfortunately that wasn’t the case,” she told 7.30. Problems in the building included graffiti, urine and bloodstains that weren’t cleaned up, cracks in the plaster from level nine to level 30,

fire escapes that didn’t seal and firefighting equipment that didn’t meet the code. There was even an illegal dumpling restaurant operating out of one of the apartments.

Ms Fletcher discovered that all major services at Tiara were contracted to companies in the Network Pacific group, including Essential Services Compliance Pty Ltd and 24 Seven Maintenance Solutions.

With a number of those contracts set to expire, the Tiara owners committee — with Ms Fletcher at the helm — decided to appoint new contractors in their place. (Video address below)

Engineer Jason Kerr took over the maintenance contract and compiled a list of about 400 problems at Tiara that needed fixing.

He said some of the firefighting equipment at Tiara had not been checked in up to 18 months.

“Things like extinguishers, hose reels, things that fight fires in the building, they are there to protect the residents and the owners’ assets, so there were deficiencies there,” he said.

Network Pacific’s managing director and chief executive officer, Stephen Briffa, said everything required under the contracts to service the Tiara building was done.

He rejects what Mr Kerr said he found at Tiara.

“That particular contract was for a three-year period, at the end of that contract every fire asset in that building was completely compliant,” he told 7.30.

He also said Ms Fletcher’s account of numerous problems in the building is simply wrong.

Tiara Apartment Building Photo Gus Goswell

With the Tiara owners’ committee determined to sign up new contractors, Network Pacific faced losing contracts worth nearly half a million dollars.

Then something curious happened. Network Pacific called a special owners’ meeting.

Dozens of investor owners who live interstate or overseas were emailed by their property managers — Ray White Southbank — and an investment firm called Ironfish Real Estate.

Those emails sought investors’ proxy votes.

Both companies told 7.30 they thought Network Pacific was doing a good job, they were concerned about the loss of its contracts, and they were acting in the best interests of their clients.

The emails sent by Ray White contained claims, initially made by Network Pacific, that Ms Fletcher was related to Mr Kerr, planting the idea that the Tiara committee had a conflict of interest in dumping its services.

Both Ms Fletcher and Mr Kerr said they are not related and the allegations made by Network Pacific are false.

“I thought it was incredible they were making such an assumption based on no information at all. They didn’t even investigate any allegations,” Mr Kerr said.

“And to be honest it was only being done, from my point of view, to discredit myself.”

Stephen Briffa said Network Pacific had concerns about Tiara’s new maintenance contractor, and had been told by another contractor that Ms Fletcher and Mr Kerr were related.

But he denied that spreading these claims had given investors the idea that there was a conflict of interest on the Tiara committee.

“Our concern was with the quality of the building management at that building by the building manager, and that’s all we were interested in,” he told 7.30.

In a statement, Ray White told 7.30 it had looked into the actions of a Ray White representative who attended the meeting, and found that he acted fairly and with integrity.

Ironfish Real Estate said it had received numerous complaints from its clients after National Pacific’s contracts expired.

The proxy votes obtained by Ray White and Ironfish turned out to be decisive in reinstating Network Pacific’s valuable contracts.

Network Pacific called an owners’ meeting at its Melbourne office for Tuesday 11th October 2016, where Jennifer Fletcher, and other owners who opposed Network Pacific, were ultimately outvoted.

Using the sheer number of investor proxy votes, Ms Fletcher and other residential owners were voted off the Tiara owners’ committee, and representatives of Network Pacific, Ray White and Ironfish were elected instead.

Then the meeting voted to reinstate Network Pacific companies as strata and building managers. In a final vote, its contracts were extended for three years.

Network Pacific says it at all times acted in the best interests of all property owners.

Stephen Briffa says the owners at Tiara each had an opportunity to find out for themselves what was happening.

“They investigated and they reached their own conclusions. Now, that conclusion happened to be the reengagement of the building manager,” he said.

After the meeting, one Tiara owner challenged Network Pacific at the Victorian Civil and Administrative Tribunal (VCAT).

But he lost, because in the eyes of the Tribunal, a large majority of owners had exercised their proxies in support of the company.

Put simply, the few owners at Tiara who were residents, rather than investors, had been outmanoeuvred and outvoted.

Despite their firsthand knowledge of the problems in their building, they had found it impossible to end their contracts with the Network Pacific group.

5 Responses to “LUXURY APARTMENT THAT PROVED ANYTHING BUT”

I will never again buy an apartment in a high rise building, nor would I rent one as an investment. You only need a couple of disgruntled hooligans who don’t care for other people’s property to get messy lifts with graffiti, urine and on the odd occasions when someone has vomited. If you want to sell you can’t get your money back even after 5 years. The problem is we have a glut of high rise apartments on Doncaster Hill which has soaked up any local demand and the overseas purchaser, who had got things moving, seems to have dropped off. Meanwhile town house sales are booming. I hope that Jennifer and her fellow residents can get their problems attended to ASAP.. It is stressful and hardly what you would expect for $82 per week.

There might be a problem with this company if what other owners corporations are saying is true. The trouble is up to 50% of apartment owners are investors who live elsewhere, many of whom are from interstate or overseas. The Owners Corporation should be the one to compose the wording of the proxy and would be best placed to outline the reasons for appointing a new property manager rather than those associated with the current operator. The allegations accompanying the proxy form that the chair had a conflict of interest etc.. and therefore the majority decision by Owners Corporation to go with another management firm should be revoked, was not fair without allowing the chair’s response in the same correspondence. The same thing appears to have occurred in other developments such as the Zinc apartment building where decisions might also have been influenced by the manipulation of the proxy votes. The best judges of whether or not the amenities and the safety of the building are up to scratch are the people who actually live in the building.
A red flag should have gone up when occupants complained about the faulty fire protection units not being maintained. There have been too many of these so called trusted fire experts who have been perfectly happy to put the lives of apartment occupants in danger by approving illegal flammable cladding throughout Australia for the sake of receiving repeat work.

There is no mention of Body Corporation fee defaults which is important. Non-payment can result in urgent maintenance not being performed. This often occurs when property prices are falling causing overseas investors to lose interest. Adding to the decline in the value of apartments is that some lenders are now demanding disclosure of illegal cladding which can result in reduced lending …same thing is occurring with insurers whose premiums will increase significantly.
Jeb

It is a very cosy arrangement with the all the vested interests in control by virtue of there being a minority of owners living in the building. Why was the report containing the 400 problems, which included non compliant fire safety issues, not passed on to the non resident owners before the proxy vote?
Ray White had looked into the actions of it’s representative who attended the meeting, and found that he acted fairly and with integrity!